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Is John Hancock Multifactor Small Cap ETF (JHSC) a Strong ETF Right Now?
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Designed to provide broad exposure to the Style Box - Small Cap Blend category of the market, the John Hancock Multifactor Small Cap ETF (JHSC - Free Report) is a smart beta exchange traded fund launched on 11/08/2017.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
Because the fund has amassed over $328.04 million, this makes it one of the average sized ETFs in the Style Box - Small Cap Blend. JHSC is managed by John Hancock. This particular fund, before fees and expenses, seeks to match the performance of the JOHN HANCOCK DIMENSIONAL SMALL CAP INDEX.
The John Hancock Dimensional Small Cap Index is designed to comprise a subset of securities in the U.S. Universe issued by companies whose market capitalizations are smaller than the 750th largest U.S. company but excluding the smallest 4% of U.S. companies at the time of reconstitution.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Operating expenses on an annual basis are 0.42% for this ETF, which makes it one of the more expensive products in the space.
It's 12-month trailing dividend yield comes in at 1.03%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
JHSC's heaviest allocation is in the Industrials sector, which is about 19.70% of the portfolio. Its Financials and Consumer Discretionary round out the top three.
Looking at individual holdings, American Campus Communities accounts for about 0.64% of total assets, followed by Popular Inc (BPOP - Free Report) and Nexstar Media Group Inc Cl A (NXST - Free Report) .
The top 10 holdings account for about 4.98% of total assets under management.
Performance and Risk
The ETF has lost about -14.96% and is down about -13.30% so far this year and in the past one year (as of 12/27/2022), respectively. JHSC has traded between $28.05 and $36.64 during this last 52-week period.
The ETF has a beta of 1.12 and standard deviation of 28.81% for the trailing three-year period. With about 431 holdings, it effectively diversifies company-specific risk.
Alternatives
John Hancock Multifactor Small Cap ETF is a reasonable option for investors seeking to outperform the Style Box - Small Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Russell 2000 ETF (IWM - Free Report) tracks Russell 2000 Index and the iShares Core S&P SmallCap ETF (IJR - Free Report) tracks S&P SmallCap 600 Index. IShares Russell 2000 ETF has $52.60 billion in assets, iShares Core S&P SmallCap ETF has $65.01 billion. IWM has an expense ratio of 0.19% and IJR charges 0.06%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Small Cap Blend.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Is John Hancock Multifactor Small Cap ETF (JHSC) a Strong ETF Right Now?
Designed to provide broad exposure to the Style Box - Small Cap Blend category of the market, the John Hancock Multifactor Small Cap ETF (JHSC - Free Report) is a smart beta exchange traded fund launched on 11/08/2017.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
Because the fund has amassed over $328.04 million, this makes it one of the average sized ETFs in the Style Box - Small Cap Blend. JHSC is managed by John Hancock. This particular fund, before fees and expenses, seeks to match the performance of the JOHN HANCOCK DIMENSIONAL SMALL CAP INDEX.
The John Hancock Dimensional Small Cap Index is designed to comprise a subset of securities in the U.S. Universe issued by companies whose market capitalizations are smaller than the 750th largest U.S. company but excluding the smallest 4% of U.S. companies at the time of reconstitution.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Operating expenses on an annual basis are 0.42% for this ETF, which makes it one of the more expensive products in the space.
It's 12-month trailing dividend yield comes in at 1.03%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
JHSC's heaviest allocation is in the Industrials sector, which is about 19.70% of the portfolio. Its Financials and Consumer Discretionary round out the top three.
Looking at individual holdings, American Campus Communities accounts for about 0.64% of total assets, followed by Popular Inc (BPOP - Free Report) and Nexstar Media Group Inc Cl A (NXST - Free Report) .
The top 10 holdings account for about 4.98% of total assets under management.
Performance and Risk
The ETF has lost about -14.96% and is down about -13.30% so far this year and in the past one year (as of 12/27/2022), respectively. JHSC has traded between $28.05 and $36.64 during this last 52-week period.
The ETF has a beta of 1.12 and standard deviation of 28.81% for the trailing three-year period. With about 431 holdings, it effectively diversifies company-specific risk.
Alternatives
John Hancock Multifactor Small Cap ETF is a reasonable option for investors seeking to outperform the Style Box - Small Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Russell 2000 ETF (IWM - Free Report) tracks Russell 2000 Index and the iShares Core S&P SmallCap ETF (IJR - Free Report) tracks S&P SmallCap 600 Index. IShares Russell 2000 ETF has $52.60 billion in assets, iShares Core S&P SmallCap ETF has $65.01 billion. IWM has an expense ratio of 0.19% and IJR charges 0.06%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Small Cap Blend.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.